Question 1

Figure 6-5
  
-Refer to Figure 6-5.If the horizontal line on the graph represents a price floor,then the price floor is

Accepted Answer

A)  binding and creates a shortage of 40 units of the good. 
B)  binding and creates a surplus of 50 units of the good. 
C)  binding and creates a surplus of 90 units of the good. 
D)  not binding but creates a surplus of 40 units of the good. 
A)  binding and creates a shortage of 40 units of the good. 
B)  binding and creates a surplus of 50 units of the good. 
C)  binding and creates a surplus of 90 units of the good. 
D)  not binding but creates a surplus of 40 units of the good.

Question 2

If the government wants to reduce smoking,it should impose a tax on

Accepted Answer

A)  buyers of cigarettes. 
B)  sellers of cigarettes. 
C)  either buyers or sellers of cigarettes. 
D)  whichever side of the market is less elastic. 
A)  buyers of cigarettes. 
B)  sellers of cigarettes. 
C)  either buyers or sellers of cigarettes. 
D)  whichever side of the market is less elastic.

Question 3

Figure 6-19
  
-Refer to Figure 6-19.The price paid by buyers after the tax is imposed is

Accepted Answer

A)  $3. 
B)  $4. 
C)  $5. 
D)  $7. 
A)  $3. 
B)  $4. 
C)  $5. 
D)  $7.

Question 4

Suppose the government wants to encourage Americans to exercise more,so it imposes a binding price ceiling on the market for in-home treadmills.As a result,

Accepted Answer

A)  the demand for treadmills will increase. 
B)  the supply of treadmills will decrease. 
C)  a shortage of treadmills will develop. 
D)  All of the above are correct. 
A)  the demand for treadmills will increase. 
B)  the supply of treadmills will decrease. 
C)  a shortage of treadmills will develop. 
D)  All of the above are correct.

Question 5

If a nonbinding price floor is imposed on a market,then the

Accepted Answer

A)  quantity sold in the market will decrease. 
B)  quantity sold in the market will stay the same. 
C)  price in the market will increase. 
D)  price in the market will decrease. 
A)  quantity sold in the market will decrease. 
B)  quantity sold in the market will stay the same. 
C)  price in the market will increase. 
D)  price in the market will decrease.

Question 6

A $0.50 tax levied on the buyers of pomegranate juice will shift the demand curve

Accepted Answer

A)  upward by exactly $0.50. 
B)  upward by less than $0.50. 
C)  downward by exactly $0.50. 
D)  downward by less than $0.50. 
A)  upward by exactly $0.50. 
B)  upward by less than $0.50. 
C)  downward by exactly $0.50. 
D)  downward by less than $0.50.

Question 7

The rationing mechanisms that develop under binding price ceilings are usually inefficient.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements is correct concerning the burden of a tax imposed on take-out food?

Accepted Answer

A)  Buyers bear the entire burden of the tax. 
B)  Sellers bear the entire burden of the tax. 
C)  Buyers and sellers share the burden of the tax. 
D)  We have to know whether it is the buyers or the sellers that are required to pay the tax to the government in order to make this determination. 
A)  Buyers bear the entire burden of the tax. 
B)  Sellers bear the entire burden of the tax. 
C)  Buyers and sellers share the burden of the tax. 
D)  We have to know whether it is the buyers or the sellers that are required to pay the tax to the government in order to make this determination.

Question 9

A $2.00 tax levied on the sellers of birdhouses will shift the supply curve

Accepted Answer

A)  upward by exactly $2.00. 
B)  upward by less than $2.00. 
C)  downward by exactly $2.00. 
D)  downward by less than $2.00. 
A)  upward by exactly $2.00. 
B)  upward by less than $2.00. 
C)  downward by exactly $2.00. 
D)  downward by less than $2.00.

Question 10

Figure 6-17
  
-Refer to Figure 6-17.Acme,Inc.is a seller of the good.Acme sells a unit of the good to a buyer and then pays the tax on that unit to the government.Acme is left with how much money?

Accepted Answer

A)  $8.00 
B)  $9.00 
C)  $10.50 
D)  $12.00 
A)  $8.00 
B)  $9.00 
C)  $10.50 
D)  $12.00

Question 11

A legal maximum on the price at which a good can be sold is called a price

Accepted Answer

A)  floor. 
B)  subsidy. 
C)  support. 
D)  ceiling. 
A)  floor. 
B)  subsidy. 
C)  support. 
D)  ceiling.

Question 12

Regardless of whether a tax is levied on sellers or buyers,taxes discourage market activity.

Accepted Answer

A) True 
 B)False

Question 13

Figure 6-15
  
-Refer to Figure 6-15.Suppose a tax of $2 per unit is imposed on this market.Which of the following is correct?

Accepted Answer

A)  One-fourth of the burden of the tax will fall on buyers, and three-fourths of the burden of the tax will fall on sellers. 
B)  One-third of the burden of the tax will fall on buyers, and two-thirds of the burden of the tax will fall on sellers. 
C)  One-half of the burden of the tax will fall on buyers ,and one-half of the burden of the tax will fall on sellers. 
D)  Two-thirds of the burden of the tax will fall on buyers, and one-third of the burden of the tax will fall on sellers. 
A)  One-fourth of the burden of the tax will fall on buyers, and three-fourths of the burden of the tax will fall on sellers. 
B)  One-third of the burden of the tax will fall on buyers, and two-thirds of the burden of the tax will fall on sellers. 
C)  One-half of the burden of the tax will fall on buyers ,and one-half of the burden of the tax will fall on sellers. 
D)  Two-thirds of the burden of the tax will fall on buyers, and one-third of the burden of the tax will fall on sellers.

Question 14

If the demand curve is very inelastic and the supply curve is very elastic in a market,then the sellers will bear a greater burden of a tax imposed on the market,even if the tax is imposed on the buyers.

Accepted Answer

A) True 
 B)False

Question 15

Economists generally believe that rent control is

Accepted Answer

A)  an efficient and fair way to help the poor. 
B)  inefficient but the best available means of solving a serious social problem. 
C)  a highly inefficient way to help the poor raise their standard of living. 
D)  an efficient way to allocate housing, but not a good way to help the poor. 
A)  an efficient and fair way to help the poor. 
B)  inefficient but the best available means of solving a serious social problem. 
C)  a highly inefficient way to help the poor raise their standard of living. 
D)  an efficient way to allocate housing, but not a good way to help the poor.

Question 16

When a tax is placed on the sellers of cell phones,the size of the cell phone market

Accepted Answer

A)  and the price paid by buyers both increase. 
B)  increases, but the price paid by buyers decreases. 
C)  decreases, but the price paid by buyers increases. 
D)  and the price paid by buyers both decrease. 
A)  and the price paid by buyers both increase. 
B)  increases, but the price paid by buyers decreases. 
C)  decreases, but the price paid by buyers increases. 
D)  and the price paid by buyers both decrease.

Question 17

Advocates of the minimum wage admit that it has some adverse effects,but they believe that these effects are small and that a higher minimum wage makes the poor better off.

Accepted Answer

A) True 
 B)False

Question 18

Suppose that a tax is placed on books.If the buyers pay the majority of the tax,then we know that the

Accepted Answer

A)  demand is more inelastic than the supply. 
B)  supply is more inelastic than the demand. 
C)  government has required that buyers remit the tax payments. 
D)  government has required that sellers remit the tax payments. 
A)  demand is more inelastic than the supply. 
B)  supply is more inelastic than the demand. 
C)  government has required that buyers remit the tax payments. 
D)  government has required that sellers remit the tax payments.

Question 19

Figure 6-9
  
-Refer to Figure 6-9.A price floor set at

Accepted Answer

A)  $4 will be binding and will result in a shortage of 3 units. 
B)  $4 will be binding and will result in a shortage of 6 units. 
C)  $7 will be binding and will result in a surplus of 6 units. 
D)  $7 will be binding and will result in a surplus of 12 units. 
A)  $4 will be binding and will result in a shortage of 3 units. 
B)  $4 will be binding and will result in a shortage of 6 units. 
C)  $7 will be binding and will result in a surplus of 6 units. 
D)  $7 will be binding and will result in a surplus of 12 units.

Question 20

Long lines and discrimination are examples of rationing methods that may naturally develop in response to a binding price ceiling.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, And Government Policies.

Figure 6-5 -Refer to Figure 6-5.If the horizontal line on the graph represents a price floor,then the price floor is

If the government wants to reduce smoking,it should impose a tax on

Figure 6-19 -Refer to Figure 6-19.The price paid by buyers after the tax is imposed is

Suppose the government wants to encourage Americans to exercise more,so it imposes a binding price ceiling on the market for in-home treadmills.As a result,

If a nonbinding price floor is imposed on a market,then the

A $0.50 tax levied on the buyers of pomegranate juice will shift the demand curve

The rationing mechanisms that develop under binding price ceilings are usually inefficient.

Which of the following statements is correct concerning the burden of a tax imposed on take-out food?

A $2.00 tax levied on the sellers of birdhouses will shift the supply curve

Figure 6-17 -Refer to Figure 6-17.Acme,Inc.is a seller of the good.Acme sells a unit of the good to a buyer and then pays the tax on that unit to the government.Acme is left with how much money?

A legal maximum on the price at which a good can be sold is called a price

Regardless of whether a tax is levied on sellers or buyers,taxes discourage market activity.

Figure 6-15 -Refer to Figure 6-15.Suppose a tax of $2 per unit is imposed on this market.Which of the following is correct?

If the demand curve is very inelastic and the supply curve is very elastic in a market,then the sellers will bear a greater burden of a tax imposed on the market,even if the tax is imposed on the buyers.

Economists generally believe that rent control is

When a tax is placed on the sellers of cell phones,the size of the cell phone market

Advocates of the minimum wage admit that it has some adverse effects,but they believe that these effects are small and that a higher minimum wage makes the poor better off.

Suppose that a tax is placed on books.If the buyers pay the majority of the tax,then we know that the

Figure 6-9 -Refer to Figure 6-9.A price floor set at

Long lines and discrimination are examples of rationing methods that may naturally develop in response to a binding price ceiling.

Ten Principles of Economics.

Thinking Like an Economist.

Interdependence and the Gains from Trade.

The Market Forces of Supply and Demand.

Elasticity and Its Application

Consumers, Producers, and the Efficiency of Markets.

Application: The Costs of Taxation.

Application: International Trade.

Externalities.

Public Goods and Common Resources.

The Design of the Tax System.

The Costs of Production.

Firms in Competitive Markets.

Monopoly.

Monopolistic Competition.

Oligopoly.

The Market For the Factors of Production.

Earnings and Discrimination.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Frontiers in Microeconomics.

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